In Re Juan O. Plata, in Re Catalina Plata, Debtors. Peter H. Arkison, Trustee v. Juan O. Plata, Catalina Plata

958 F.2d 918 60 USLW 2589 , 26 Collier Bankr.Cas.2d 914 , Bankr. L. Rep. P 74,508 In re Juan O. PLATA, In re Catalina Plata, Debtors. Peter H. ARKISON, Trustee, Appellant, v. Juan O. PLATA, Catalina Plata, Appellees. No. 90-35498. United States Court of Appeals, Ninth Circuit. Submitted Jan. 11, 1991. * Decided March 10, 1992. Peter H. Arkison, Bellingham, Wash., for appellant. Laughlan H. Clark, Brennan & Clark, Bellingham, Wash., for appellees. Appeal from the Ninth Circuit Bankruptcy Appellate Panel. Before WRIGHT, BRUNETTI and LEAVY, Circuit Judges. LEAVY, Circuit Judge: 1 This case presents the court with a question of first impression involving an interpretation of Chapter 12 of the Bankruptcy Code, viz., do funds acquired by the petitioners following confirmation of their reorganization plan and held by the Chapter 12 bankruptcy trustee for eventual distribution to creditors belong to the petitioners or to their creditors at the time the Chapter 12 case is converted to a Chapter 7 liquidation? We agree with the Bankruptcy Appellate Panel ("BAP") in its affirmance of the bankruptcy court and hold that such funds revest in the petitioners at the time of conversion. FACTS…

dissenting:

I respectfully dissent.

The majority misapplies In re Nash, 765 F.2d 1410 (9th Cir.1985). Nash involved a dismissal of a Chapter 13 case, not a conversion of a Chapter 13 case to a Chapter 7 case. Although the majority can find “no clear reason” for distinguishing between dismissals and conversions, one is given by Nash itself — the Bankruptcy Code. Nash relied primarily on section 349(b)(3) of the Bankruptcy Code which provides that dismissal of a case “revests the property of the estate in the entity in which such property was vested immediately before the commencement of the case.” 11 U.S.C. § 349 (b)(3). This statute expressly refers only to dismissal cases and does not apply to conversion cases. Recognizing this, the Nash court distinguished conversion cases that had ordered funds held by the Chapter 13 trustee upon conversion be distributed according to the confirmed plan on the basis that such cases “do not address the fact that dismissal revests the property of the estate in the debtor. 11 U.S.C. § 349 (b)(3).” 765 F.2d at 1414 (distinguishing Resendez v. Lindquist, 691 F.2d 397 *923 (8th Cir.1982), and In re Giambitti, 27 B.R. 492 (Bankr.D.Or.1983)). Nash,…

This case presents the court with a question of first impression involving an interpretation of Chapter 12 of the Bankruptcy Code, viz., do funds acquired by the petitioners following confirmation of their reorganization plan and held by the Chapter 12 bankruptcy trustee for eventual distribution to creditors belong to the petitioners or to their creditors at the time the Chapter 12 case is converted to a Chapter 7 liquidation? We agree with the Bankruptcy Appellate Panel (“BAP”) in its affirmance of the bankruptcy court and hold that such funds revest in the petitioners at the time of conversion.

FACTS AND PRIOR PROCEEDINGS

Juan and Catalina Plata (“Debtors”) are family farmers who filed a petition in 1987 under Chapter 12 of the Bankruptcy Code. 1 Debtors submitted a plan, confirmed by the bankruptcy court early the following year, *920 which provided that some $29,000 would be paid to the bankruptcy trustee for distribution to their creditors in 1988. Most of this money was to come from the proceeds of the sale of strawberries and raspberries grown on Debtors’ farm. Unfortunately for all concerned, by harvest time it became apparent that Debtors’ berry crop would not generate…